Abstract
We consider an empirical model of worldwide airline alliances that we apply to a large set of companies for the period 1995–2000. Using observations at the network level, we estimate a cost, capacity, and demand system that accounts for cross-price elasticities. Our contribution consists in evaluating airlines’ strategical interactions through the window of firms’ network interconnections. We consider networks coincidences and potential connections with all their rivals. The results allow us to classify all company pairs as either complements or substitutes. We shed light on the fact that many airlines involved in the same alliance are potential substitutes.
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Both authors are members of the CEPR. We would like to thank Pedro Mira and two anonymous referees for very helpful comments. We are also grateful to Jordi Jaumandreu for very constructive discussions, as well as Quim Beltrán for superb research assistance. Finally, funding from the Fundación Ramón Areces and Ministerio de Educación y Ciencia (SEJ2004-00670 and SEJ2007-66268) is gratefully acknowledged.
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Open Access This article is distributed under the terms of the Creative Commons Attribution 2.0 International License (https://creativecommons.org/licenses/by/2.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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Gagnepain, P., Marín, P.L. The effects of airline alliances: what do the aggregate data say?. SERIEs 1, 251–276 (2010). https://doi.org/10.1007/s13209-010-0024-5
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DOI: https://doi.org/10.1007/s13209-010-0024-5